The Australian Dollar (AUD) recently saw a break in its four-day losing streak against the US Dollar (USD) following the release of key economic data. Australia’s Consumer Inflation Expectations dropped to 3.8% in November, down from 4.0% in the previous month, reaching its lowest level since October 2021. Despite this, Australia’s Unemployment Rate held steady at 4.1% in October for the third consecutive month, in line with market expectations. However, the Employment Change data showed only 15.9K new jobs added in October, falling short of the anticipated 25.0K.
Reserve Bank of Australia (RBA) Governor Michele Bullock made hawkish comments on Thursday, stating that current interest rates are sufficiently restrictive and will remain so until the central bank is confident about inflation trends. Bullock emphasized the uncertainty surrounding potential actions by the US Federal Reserve and indicated that the RBA would avoid making hasty decisions. This comment provided support for the Australian Dollar in the market.
In contrast, the US Dollar (USD) has been hovering around 106.53, its highest level since November 2023, driven by “Trump trades” and October’s US Consumer Price Index (CPI) data. Donald Trump’s victory in the previous US presidential election fueled expectations of potentially inflationary tariffs and other measures from his upcoming administration, giving a strong boost to the Greenback.
China’s latest stimulus measures, announced last week, have fallen short of investor expectations, further dampening demand prospects for Australia’s largest trading partner. This has weighed on the Australian Dollar in the market. China unveiled a 10 trillion Yuan debt package designed to alleviate local government financing pressures and support struggling economic growth, but the package did not include direct economic stimulus measures.
Looking ahead, traders are now focusing on the US October Producer Price Index (PPI) data, set to be released on Thursday. This data release is expected to impact the movement of the Australian Dollar against the US Dollar. Additionally, market participants continue to analyze the potential impacts of the Trump administration’s macroeconomic policies, particularly in areas like tariffs, immigration, and fiscal measures, on the currency market.
In terms of technical analysis, the AUD/USD pair is currently trading near 0.6490, with short-term downward pressure evident on the daily chart. The pair remains below the nine-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) is below the 50 mark, reinforcing a bearish outlook. Immediate support for the pair may be found near the psychological level of 0.6400, with a break below potentially leading to further downward pressure. On the upside, resistance is seen at 0.6500, with potential targets at the EMAs and the next psychological level at 0.6700.
In conclusion, the Australian Dollar has seen fluctuations in response to recent economic data releases and external factors like US policy announcements and China’s stimulus measures. Traders are closely monitoring upcoming data releases and geopolitical developments to gauge the currency’s future direction. Technical analysis suggests a bearish outlook for the AUD/USD pair, with key levels to watch for potential support and resistance. The Australian Dollar’s performance in the coming days will continue to be influenced by a combination of domestic economic data, global market trends, and geopolitical events.
